retailpro_8k-ex1001.htm


    EXHIBIT 10.1

    
 

    DEBENTURE
AND WARRANT PURCHASE AGREEMENT

    


    This
Debenture and Warrant Purchase Agreement (this “Agreement”), dated as
of June 27,  2008, is made by and between Retail Pro, Inc. (the “Company”) and
Midsummer Investment Ltd. (the “Purchaser”).

     

    For good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

     

    1.           Issuance of Debenture and
Warrant. The Company hereby agrees to issue to the Purchaser against
payment therefor as described herein, (a) a debenture of the Company in the
aggregate principal amount of $500,000, which debenture shall be in the form of
Exhibit A
attached hereto (a “Debenture”) and (b)
Warrants to purchase an aggregate of up to 3,000,000 shares of Common Stock,
with an exercise price per share equal to $0.01, which warrant shall be in the
form of Exhibit
B attached hereto (the “Warrant”).  The
total purchase price to be paid by the Purchaser for the purchase of the
Debenture and the Warrant is $500,000 (the “Subscription
Amount”).  Subject to the terms and conditions hereunder, at
the closing, the Company shall deliver to the Purchaser the Debenture and the
Warrant, and the Purchaser shall deliver the Subscription Amount to the account
designated in writing by the Company.

     

    2.           Documents.

     

    (a)           The
rights and obligations of the Purchaser and of the Company with respect to the
Debenture, the Warrant and the shares of Common Stock issuable under the
Debenture and Warrant (the “Underlying Shares”)
shall be identical in all respects to the rights and obligations of the
Purchasers and the Company with respect to the debentures, the warrants and the
underlying shares issued pursuant to that certain Securities Exchange Agreement
dated June 13, 2008 among the Company and the Purchaser (the “Exchange Agreement”).
Defined terms not otherwise defined herein shall have the meanings set forth in
the Exchange Agreement.

     

    3.           Representations and
Warranties of the Company.  The Company hereby makes to the
Purchaser the following representations and warranties:

     

    (a)           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder and
thereunder.  The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, its board of directors
or its stockholders in connection therewith.  This Agreement has been
duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

     


    
      
         


      

      
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    (b)           No
Conflicts.  The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Company’s certificate or articles of incorporation, bylaws or
other organizational or charter documents; or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien (except as contemplated
herein) upon any of the properties or assets of the Company in connection with,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any material
agreement, credit facility, debt or other material instrument (evidencing
Company debt or otherwise) or other material understanding to which such Company
is a party or by which any property or asset of the Company is bound or
affected; or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected, except, in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect (as defined in the Exchange
Agreement).

     

    (c)           Issuance of the Debenture
and Warrant.  The Debenture and Warrant are duly authorized
and, upon the execution of this Agreement by a Purchaser, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents.  The Underlying Shares, when issued in
accordance with the terms of the Debenture and Warrant, will be validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the
Company.  The Company has reserved from its duly authorized capital
stock a number of shares of Common Stock for issuance of the Underlying
Shares.

     

    (d)           Affirmation of Prior
Representations and Warranties.  Except as set forth on Schedule 3(d) hereto,
the Company hereby represents and warrants to each Purchaser that the Company’s
representations and warranties listed in Section 3.1 of the Exchange Agreement
are true and correct as of the date hereof.

     

    4.           Representations and
Warranties of the Purchaser.  The Purchaser hereby represents
and warrants as of the date hereof to the Company as follows:

     

    (a)           Authority.  The
execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of such Purchaser.  This
Agreement has been duly executed by such Purchaser and, when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.

     


    
      
         


      

      
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    (b)           Own
Account.  Such Purchaser (i) understands that the Debenture and
Warrant are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law, (ii) is acquiring the
Debenture and Warrant as principal for its own account and not with a view to or
for distributing or reselling such Debentures or Warrant or any part thereof in
violation of the Securities Act or any applicable state securities law, (iii)
has no present intention of distributing any of such securities in violation of
the Securities Act or any applicable state securities law and (iv) has no
arrangement or understanding with any other persons regarding the distribution
of such Debenture and Warrant (this representation and warranty not limiting
such Purchaser’s right to sell the Underlying Shares pursuant to a registration
statement or otherwise in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state
securities law.  Such Purchaser is acquiring the Debentures and
Warrant hereunder in the ordinary course of its business.

     

    (c)           Purchaser
Status.  At the time Purchaser was offered the Debenture and
Warrant, it was, and at the date hereof it is, and on each date on which it
exercises the Warrant or converts the Debentures it will be an “accredited
investor” as defined in Rule 501 under the Securities Act.  Purchaser
is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act.

     

    (d)           Experience of
Purchaser.  Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Debenture and Warrant, and has so evaluated
the merits and risks of such investment.  Such Purchaser is able to
bear the economic risk of an investment in the Debenture and Warrant and, at the
present time, is able to afford a complete loss of such investment.

     

    (e)           General
Solicitation.  Purchaser is not purchasing the Debenture and
Warrant as a result of any advertisement, article, notice or other communication
regarding such securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

     

    5.           Delivery of
Opinion.  Concurrently herewith, the Company shall deliver to
the Purchasers an opinion of outside counsel regarding this Agreement and the
issuance of the Debentures and Warrants in form and substance reasonably
acceptable to the Purchasers.

     

    



    
      
         


      

      
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    6.           Public
Disclosure.  The Company shall, on or before the 4th Trading
Day following the date hereof, issue a Current Report on Form 8-K, reasonably
acceptable to the Purchasers, disclosing the material terms of the transactions
contemplated hereby, and shall attach this Agreement thereto.  The
Company shall consult with the Purchasers in issuing any other press releases
with respect to the transactions contemplated hereby.

     

    7.           Laurus
Waiver.  As a condition to the closing hereunder, the Company
shall have obtained a waiver from Laurus Master Fund, Ltd. and its affiliates in
respect of any dilution adjustment such entities would otherwise be entitled to
under securities of the Company in respect of the issuance of the Debentures,
Warrants and Underlying Shares.

     

    8.           Expenses.  The
Company agrees to pay to Purchaser $30,000 at the closing, as reimbursement for
Purchaser’s legal expenses (such amounts shall be in satisfaction of
reimbursement for the Purchaser’s legal expenses associated with the Exchange
Agreement and the transactions contemplated hereby).  Except as set
forth above, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.

     

    9.           Amendments and
Waivers.  The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and
Purchaser.

     

    10.           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

     

    11.           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Purchaser. The Company may not assign (except
by merger) its rights or obligations hereunder without the prior written consent
of the Purchaser.  The Purchaser may assign their rights hereunder in
the manner and to the persons as permitted under the Debentures and
Warrants.

     


    
      
         


      

      
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    12.           Execution and
Counterparts.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

     

    13.           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the transaction documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other transaction documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
transaction documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.   If either party shall commence an action or
proceeding to enforce any provisions of the transaction documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

     

    14.           Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     


    
      
         


      

      
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    15.           Headings.  The
headings in this Agreement are for convenience only, do not constitute a part of
the Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

     

    16.           Secured
Obligation.  The parties acknowledge and agree that the
obligations of the Company under this Agreement and the Debentures, are subject
to the security interest granted by the Company and its Subsidiaries pursuant to
that certain Amended and Restated Security Agreement and Subsidiary Guarantee,
dated June 13, 2008, by and among the Company, its Subsidiaries and the secured
parties thereto and that such obligations are “Obligations” under such Amended
and Restated Security Agreement and are guaranteed by the Subsidiaries pursuant
to any Subsidiary Guarantee entered into in connection therewith.  The
Company and the Subsidiaries shall take any and all actions as may be necessary
or appropriate in order to grant the Purchasers a first priority security
interest in the assets of the Company and the Subsidiaries, including all UCC-1
filing receipts if required.

     

    


    [SIGNATURE
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    Executed
as of the first date written above by the undersigned duly authorized
representatives of the Company and Purchaser:

     

    


    RETAIL
PRO, INC.

    


    


    By:                                                                

            Name:                                                   

            Title:                                                     

    


    Address
for Notice:

    


    


    MIDSUMMER
INVESTMENT LTD.

    


    Signature of Authorized
Signatory:                                                                    

    Name of
Authorized Signatory:                                                                           

    Title of
Authorized Signatory:  ________________________________

    Address
for Notice                                                                                                

    ________________________________________________________

    ________________________________________________________

    


    



    
      
         


      

      
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    Schedule 3(d)

    


               On June 19, 2008, the Company received a notice of
default (the “Notice”) from LV Administrative Services, Inc. (the “Agent”) as
agent on behalf of Laurus Master Fund, Ltd. and Valens Offshore SPV II, Corp.
indicating that the Company is in default under the terms of (i) that certain
Amended and Restated Secured Convertible Term Note dated as of July 12, 2004, as
amended and restated as of October 29, 2004, (ii) that certain Secured
Convertible Term Note dated June 15, 2005 (as amended, restated, modified and/or
supplemented from time to time), and (iii) that certain Secured Term Note dated
as of February 29, 2008 (collectively, the “Notes”) for failure to make payments
of interest in the manner prescribed under the Notes.  The Notice
accelerates and declares immediately due and payable an aggregate amount equal
to $10,740,409.21 (the “Default Amount”), which purportedly includes the
principal outstanding amount of the Notes, unpaid interest and default fees
through June 19, 2008.  As provided in the Notice, if the Company
fails to pay the Default Amount in full by 3 p.m. (New York Time) on June 26,
2008, the Agent may exercise its rights and remedies against the Company
pursuant to applicable law including foreclosure of its security interest
against all of the assets of the Company.

     

     

     

     

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